What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Pflugerville TX is a contract between you (the taxpayer) and the IRS that settles a tax debt for less than the total owed. This applies to all taxes, including any interest, penalties, or extra quantities emerging under the Internal Revenue Code.
An offer in compromise permits you to settle your tax debt for less than the full amount you owe. It provides eligible taxpayers with a course towards paying off their tax debt and getting a “fresh start.” The supreme objective is a compromise that fits the best interest of both the taxpayer and the IRS. To be thought about, normally you must make a proper offer based upon what the IRS considers your real capability to pay. It may be a genuine alternative if you can’t pay your complete tax liability, or doing so produces a financial difficulty.
A typical myth or understanding thanks to advertisements is the impression that taxpayers can quickly settle their tax liability “for pennies on the dollar” through the offer in compromise program. While you can definitely acquire a lower settlement of your tax debt, these ads offer an inaccurate understanding that the majority of deals are suitable and that a lot of deals will be accepted (even improper offers).
The IRS considers your unique set of facts and scenarios. So it is important that you have representation from a knowledgeable tax professional, such as The Tax Attorney Network, so that your interests are secured and that a suitable deal is made based on your:
Capability to pay;
The OIC application needs you to explain your monetary circumstance in information, so before you proceed you should be willing to make a full and total disclosure in the above areas.
Are You Eligible For An Offer In Compromise in Pflugerville Texas
Before the IRS will consider your deal, you should: (1) submit all tax returns you are lawfully required to file, (2) make all required estimated tax payments for the current year, and (3) make all required federal tax deposits for the existing quarter if you are an entrepreneur with workers. In addition, you are not qualified if you remain in an open personal bankruptcy case.
The OIC program is an option for taxpayers who are not able to pay their tax quantities in a swelling amount or through an installation contract and have actually exhausted their search for other payment arrangements. To qualify for the OIC program, taxpayers should have the ability to demonstrate and show that their tax amount can not be settled under either a swelling amount or installment contract for starters.
All other payment options must be considered prior to submitting an offer in compromise. The Offer in Compromise program is not for everyone.
The IRS may lawfully compromise a tax liability for one of the following reasons:
Doubt As To Liability: There is doubt regarding whether the examined tax is correct.
Doubt As To Collectability: There is doubt that you might ever pay the total of the tax owed. In these cases, the total amount you owe need to be greater than the sum of your possessions and future income.
Promote Effective Tax Administration: There is no doubt that the assessed tax is correct and no doubt that the amount owed might be collected, but you have a financial challenge or other unique circumstances which may enable the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or less installments within 5 or fewer months from notice of approval.
Short Term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS receives the OIC.
Typically, the IRS will not accept an offer if you can pay your tax debt in full through an installment agreement or a swelling sum.
It is very important to keep in mind that penalties and interest will continue to accrue throughout the deal examination process.